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PANKAJ BHANDARI
Continental Engineering Corporation – Appellant
Versus
Jaipur Metro Rail Corporation Limited – Respondent
ORDER :
Mr. Pankaj Bhandari, J. - Applicant - M/s. Continental Engineering Corporation has filed this Application under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as 'the Act') with a prayer for restraining the non-applicant/respondent - M/s. Jaipur Metro Rail Corporation Limited from invoking the bank guarantee. During the pendency of the application under Section 9 of the Act, the applicant filed an SLP before the Apex Court bearing Special Leave Petition (Civil) Diary No.47858/2023, which was decided by the Apex Court on 20.11.2023 and following order was passed:
(i) The Single Judge of the High Court is requested to take up the application under Section 9, namely, SB Arbitration Application No. 130 of 2023 on 22 November 2023;
(ii) Both the parties have agreed to the above course of action and state that they will cooperate in the hearing of the application for the grant of injunctive relief;
(iii) Till the High Court takes up the application for ad interim relief on 22 November, 2023, and bearing in mind that there was a protection in operation of guarantees till 17 November 2023, we extend the protect
Bank guarantees are independent contracts and can only be restrained from invocation in cases of fraud or special equities, which were not established in this case.
Invocation of an unconditional bank guarantee cannot be restrained unless fraud or irretrievable injustice is established; the nature of bank guarantees is independent and absolute.
Unconditional bank guarantees may only be reviewed for egregious fraud or irretrievable injustice; disputes over contract performance must be resolved through arbitration.
The invocation of bank guarantees must adhere strictly to the contractual terms; courts may intervene to prevent encashment if it risks undermining arbitration.
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